By Hideyuki Sano
TOKYO, Sept 16 (Reuters) - The yen crept higher on Thursdaybut the market was on the alert for more intervention by Japaneseauthorities after a massive amount of yen-selling the previousday knocked the yen off a 15-year high against the dollar.
Some traders see the likelihood of another round ofintervention increasing if the dollar slips back below 85 yen.
Japan sold an estimated 2 trillion yen ($23 billion) onWednesday, a record for a single day, in a move seen as aimed atshowing its resolve to curb yen strength.
The market is also watching what U.S. Treasury Secretary TimGeithner might say later in the day about Japan's intervention,which boosted the dollar by more than 3 percent, its biggestdaily gain against the yen in almost two years.
"Intervention will likely continue for a while, perhaps forquite a long time, because once authorities start it, it's notsomething that they can stop easily," said a trader at a majorJapanese bank.
Prime Minister Naoto Kan reiterated on Thursday that Japanwould take decisive steps on yen rises if needed, Jiji newsagency reported.
The dollar fell about 0.5 percent to 85.30 yen as someJapanese exporters took advantage of its jump to sell dollarsearned overseas, pushing it off Wednesday's high of 85.78 yen hiton electronic trading platform EBS.
The dollar sprang up from a 15-year low of 82.87 yen onWednesday after Japanese authorities, concerned that the yen'srise will hurt the economy by squeezing exporters' profits,stepped into the market for the first time in six years.
Traders have said Japanese exporters wanted to sell thedollar above 85 yen before their half-year book-closings at theend of September. sagged while the premiums market players payfor dollar puts over dollar calls shrank, suggesting optionmarket players see a reduced chance of the dollar's plungeagainst yen.
The one-month dollar/yen risk reversal spread stood at0.825/0.575 in favour of dollar puts, the smallest in about fivemonths.
Many traders think it is too early to tell if Japan's latestcampaign to dampen the yen's strength will succeed partly becauseof the uncertainty over how Japan's intervention will beperceived by other Group of Seven (G7) partners.
That makes Geithner's testimony to the Senate BankingCommittee at 1400 GMT all the more important as Japan'sintervention could be complicating his efforts to persuade Chinato let the yuan appreciate.
Any criticism by Geithner of Japan's intervention could sparkspeculation that Japan may scale back its activity, dealers said.
On Wednesday, U.S. lawmaker Sander Levin, who chairs the U.S.congressional committee examining China's currency policy,described Japan's intervention as "deeply disturbing".
Geithner will tell lawmakers in prepared testimony thatChina's yuan currency has risen too slowly and he is examiningwhat tools may be needed to persuade Beijing to move faster.
The euro traded at 110.76 yen, now down about 0.7 percent onthe day and off a one-month high of 111.63 yen struck onWednesday.
The euro was little changed against the U.S. dollar at$1.2992, off a one-month high of $1.3037 hit on Wednesday.
The New Zealand dollar slipped half a U.S. cent to around$0.7260 after the country's central bank signalled that interestrates would likely not rise as far or fast as many had expected.
The head of the Reserve Bank of New Zealand (RBNZ), AlanBollard, said the kiwi's strength was not justified by thecountry's fundamentals, pushing the kiwi to five-month lowagainst the Australian dollar. (Additional reporting by Masayuki Kitano and Aiko Hayashi;Editing by Edwina Gibbs)